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Fee fight pushes network out of OC

County's broadband plan takes a hike after an impasse

Clackamas County declared an impasse last week in its running franchise-fee argument with Oregon City on its 180-mile broadband fiber ring, and plans to build the $11.1 million project around Oregon City so it can still reach from Milwaukie to Molalla and Government Camp.

Expansion of low-cost Internet service is still on hold to link densely populated areas of the northwest with Mount Hood communities and the rural southern part of the county while engineers find a way around the city. Although several options are still being considered, the workaround could abandon city limits completely or could involve traversing Oregon City rights of way on county- or state-owned roads.

There's no easy fix, says Dave Soloos, Clackamas County's project manager, since they've already spent $800,000 in the city on 20,000 feet of 'major backbone' from the county's Oregon City-based headquarters at Red Soils to the Tri-City sewage treatment facility on the other side of town.

Using a $7.8 million federal grant supplemented with a $3.3 million local match, construction began this spring and must be completed by 2013 under the terms of the grant. But on Sept. 13, while workers contracted by the county were installing fiber on Jackson Street, they received a pink slip from Oregon City's Public Works Department demanding a work stoppage until they obtained a franchise agreement from the city.

Oregon City officials contend that the county also didn't obtain the necessary paperwork, pointing to a permit that only covered about 10,000 feet. Although it wouldn't want the county to bypass, the city also wouldn't want to make an exception for the county, according to City Recorder Nancy Ide, at the expense of fairness to other agencies and municipal taxpayers.

As an example, in its most recent agreement with TW Telecom of Oregon, the city will receive 5 percent of gross revenue, a minimum annual fee of at least $3,000 and $2.75 per lineal foot of cable not used to provide telecommunications service. During the past fiscal year, Oregon City received about $1.6 million from franchise fees, including $332,242 from Comcast and $92,642 from Qwest (now CenturyLink).

'We're eager to get that stop-work order lifted, and we're working as hard as we can to reach an agreement,' Ide said. 'But Oregon City also wants to make sure it offers a level playing field for all of the agencies.'

The county, however, argues that it was working with Oregon City for months to try to obtain the necessary permits, so the stop-work order should not have been necessary. Additionally, the county sees itself more as a nonprofit acting as a middleman for companies to provide activation of the so-called dark fiber.

'We're just passing along the costs that we have. We don't provide broadband, so there's no 'other' to compare us to,' said County Spokesperson Tim Heider. 'The bottom line is the fact that it's a service opportunity for the entire county, and the city's proposals seem to indicate that the city sees this more as a revenue opportunity.'

Net costs were $186 a month as originally presented to the county by the Oregon City School District, but with franchise fees an extra $632 would be attached per month, for a total of $818. That would put the total cost well above the $486 a month district facilities currently pay, so the county has heard that the local school district would likely have to opt out.

'I don't know how they could come up with those figures because we're still in negotiations,' Ide said.

Mounting tensions

Heider said that tensions surfaced in the spring when Oregon City declined to connect city-owned facilities to the broadband network, and he saw the city's passage of an emergency ordinance on Sept. 7 as targeting the county. The definition of telecommunications service was changed to 'any service provided for the purpose of transmission of information including, but not limited to, voice, video or data, without regard to the transmission protocol employed and whether or not the transmission medium is owned by the provider itself.'

Oregon City's 1999 code was 'ancient' by Internet standards, city officials said, and the ordinance passage was simply a reaction to negotiations with several organizations interested in laying fiber.

'We had on our plates all at once about a half dozen new and renewed franchise agreements,' Ide said. 'Our city code says that anyone who wants to lay fiber in the city has to pay the fee, so it wouldn't be appropriate for city staff to make an exception.'

The City Commission could decide to make an exception for the county by paying the costs of the permits, or by determining it could be in the public interest to make an in-kind donation to subsidize the school district's share of costs, Ide said.

Heider said that the county doesn't have much hope to resolve its conflict with Oregon City and will probably have to proceed without providing any potential access points to dark fiber to schools and fire stations within the city.

Saving some money in the costs associated within Oregon City, he expects, will enable the county to keep the project on target for other cities and rural areas.

'We're committed to providing this service to the county under that grant agreement,' he said.